A N N U A L

R E P O R T

2008

Contents

Profile of NIKKO

1Financial Highlights

1

Consolidated Balance Sheets2

Consolidated Statement of Income

4

Consolidated Statement of Shareholders' Equity

5

Consolidated Statement of Cash Flows6

Notes to the Consolidated Financial Statements

7

Board of Directors and Satutory Auditors

17

Corporate Data

17

Financial Highlights
NIKKO COMPANY

Consolidated

Data
Total Assets &Shareholders' Equity

Net Income

Net Sales(Million Yen)

(Million Yen)

24,000Total Assets
Shareholders' Equity
Shareholders' Equity Ratio (%)
100.0

100

(%)

23,000(Million Yen)

22,000Δ100

20,00080.0

Δ300

15,00060.0

Δ500

10,000

40.0

Δ700

5,000

20.0

21,00020,00019,00018,00017,00016,000Δ943

Δ2,628Δ900

15,000
'04

'05

'06

'07

2008
2008

0.0

0
'04

'04

'05

'06

'07

'05

2008
2008

'06

'04

'07

'05

'06

(except per share amounts and %)Number of Shares

2004
22,3441
10
20,49011,473
56.0
0.0

2005
22,91872
20,833
11,527
55.3
0.6

2006
22,660(943)
19,854
10,252
51.6
(8.7)

2007
22,359(643)
19,826
10,251
51.7
(6.3)

2008
21,267(2,628)18,046
7,586
42.0(29.5)

17,072,000

17,072,000

17,072,000
Yen

19,572,000

19,572,000(57.07)621.433.00(38.79)541.894.00

Per Share of Common StockNet Income
Shareholders' Equity
Cash Dividends

0.08
680.946.00

4.35
691.476.00

Note: ￥98.40 = U.S.$1.00; See Notes to the Consolidated Financial Statements.

-1-

2008
2008

2008

Millions of yen

Consolidated Data
Net Sales
Net Income
Total Assets
Shareholders' Equity
Shareholders' Equity Ratio (%)
Return on Shareholders' Equity (%)'07

Thousands of
U. S. dollar(except per
share amounts)
2008
216,137(26,709)
183,398
77,096U. S. dollar(139.46)403.551.00(1.417)
4.101
0.010

Consolidated Balance Sheets
NIKKO COMPANY

October 31, 2008 and 2007

Thousands of
U. S. dollar
2008

Millions of yen
2008
2007

ASSETS
Current Assets:
Cash and time deposits
Marketable securities
Notes and accounts receivable:
Trade
Subsidiaries and affiliates
Other
Allowance for doubtful accounts¥3,991-¥4,170100$40,560

4,005
52
(0)
(102)

4,441
140
0
(31)

40,706531(3)(1,041)

4,046
5
327
12,325

4,350
296
175
13,645

41,12255
3,325
125,256

Investments and Other Assets:
Investment securities
Stocks of affiliates
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets

549
219
168
(79)
858

785
189
554
405
(68)
1,866

5,581
2,234
1,715
(807)
8,723

Property, plant and equipment, at cost:
Land
Buildings
Machinery and equipment
Construction in progress
Accumulated depreciation
Net property, plant and equipment

1,316
6,571
7,461
38
(10,616)
4,772

1,316
5,890
7,448
17
(10,438)
4,234

13,381
66,78475,824394(107,888)
48,496

90

79

922

¥18,046¥19,826$183,398

Inventories
Deferred tax assets
Prepaid expenses and other current assets
Total current assets

Intangible Assets and otherTotal Assets

See Notes to the Consolidated Financial Statements.

-2--

Consolidated Balance Sheets
NIKKO COMPANY

October 31, 2008 and 2007

Thousands of
U. S. dollar
2008

Millions of yen
2008
2007

LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:
Notes and accounts payable:
Trade
Subsidiaries and affiliates
Other¥3,884432
8¥4,067367
11$39,480
4,400
82

Short-term loans payable
Construction notes payable
Accrued expenses
Accrued income taxes
Reserve for bonuses
Reserve for guarantee for after-care of products
Other
Total current liabilities

2,534
540
223
55
431
94
1,015
9,220

2,205
59
183
53
428
82
1,001
8,459

25,756
5,493
2,269
567
4,380
955
10,31893,705Long-term liabilities:
Reserve for directors' retirement benefits
Reserve for loss on business of affiliates
Reserve for retirement benefits
Other
Total long-term liabilities
Total Liabilities

76
1,035
127
1,239
10,460

74
66
882
92
1,115
9,574

782
10,5201,294
12,597
106,302

－

－

－

3,200
3,620

3,200
3,620

32,52036,790

1,296
(116)
(94)
(319)

3,981
(115)
(152)
(281)

13,174(1,182)(959)(3,247)

7,586

10,251

77,096¥18,046¥19,826$183,398

Minority Interests
Shareholders' Equity:
Common stock, ￥50 par value per share
Authorized-60,000,000 shares;
Issued-19,572,000 shares in 2008
and 19,572,000 shares in 2007
Additional paid-in capital (Capital reserve)
Retained earnings
Net unrealized loss on securities
Translation adjustment
Treasury stocks
773,364 shares in 2008 and 653,379 shares in 2007
Total shareholders' equity
Total Liabilities, Minority Interests
and Shareholders' Equity

See Notes to the Consolidated Financial Statements.

-3-Consolidated Statement of Income
NIKKO COMPANY

Years ended October 31, 2008 and 2007

Millions of yen
2008
2007
¥21,267¥22,359
16,035
16,5605,232
5,798

Net Sales
Cost of Sales
Gross profit

Thousands of
U. S. dollar
2008$216,137
162,957
53,180

Selling, General and Administrative Expenses
Operating income (loss)

6,279(1,046)

6,069
(270)

63,812(10,632)

Other (Income) Expenses:
Interest expenses
Interest and dividend income(Gain) on sale or loss on disposal of property, net
Other, net
Income before taxes (loss)

16
(4)
36
630
(1,725)

16
(4)
32
23
(338)

165
(44)
374
6,406
(17,534)

49
853
902

32
271
304

505
8,669
9,175

¥(2,628)¥(643)$(26,709)

Income taxes-current
Income taxes-deferred
Income taxes

Net income (loss)

Yen
2008
Amounts Per Share of Common Stock:
Net Income (loss)
Cash dividends¥(139.46)
1.00

See Notes to the Consolidated Financial Statements.

-4-

Yen
2007
¥(38.79)
4.00

U. S. dollar
2008$(1.417)0.010

Consolidated Statement of Shareholders' Equity
NIKKO COMPANY

Years ended October 31, 2008 and 2007

Balance, October 31, 2007
Net income for the year
Cash dividends
Balance, October 31, 2008

Number ofshares ofcommon stock(thousands)
19,572－－
19,572Millions of yen
Commonstock¥3,200－－¥3,200Capitalsurplus¥3,620－－¥3,620Retainedearnings¥3,981(2,628)(56)¥1,296

Thousands of U. S. dollars
CommonCapitalRetainedstock
surplusearnings$27,879$31,540$34,685－－(26,709)－－(575)$32,520$36,790$13,174

Balance, October 31, 2007
Net income for the year
Cash dividends
Balance, October 31, 2008

See Notes to the Consolidated Financial Statements.

-5-Consolidated Statement of Cash Flows
NIKKO COMPANY

Years ended October 31, 2008 and 2007

Thousands of
U. S. dollar
2008

Millions of yen
2008
2007
Net cash provided by operating activities:
Income (Loss) before income taxes¥(1,725)¥(338)$(17,534)

Depreciation
Allowance for doubtful accounts
Increase (Decrease) in reserve for bonuses
Increase (Decrease) allowance for investment loss of affiliates
Increase (Decrease) in reserve for loss on business of affiliates
Increase (Decrease) in reserve for guarantee for after-care of products
Increase (Decrease) in reserve for retirement benefits
Interest and dividend income
Loss on retirement of fixed assets
Loss (Gain) on valuation of investments in securities
Loss (Gain) on valuation of derivatives
Interest expenses(Increase) Decrease in notes and accounts receivables(Increase) Decrease in inventories
Increase （Decrease） in notes and accounts payables
Other

427
81
3
19
(66)
12
152
(12)
36
287
4
16
477
304
(118)
180
82

328
37
(13)
(10)
10
82
150
(12)
32
－
(62)
16
132
(38)
(260)
(69)
(16)

4,346
829
30
196
(670)
121
1,551
(126)
374
2,922
49
165
4,857
3,093
(1,208)
1,837
838Interest and dividend income received
Interest expenses paid
Income taxes paid

12
(16)
(37)

12
(16)
(18)

126
(165)
(377)

Net cash provided by operating activities

¥41

¥(38)

$421

Net cash used in investment activities:
Purchase of marketable securities
Proceeds from sales of marketable securities
Proceeds from sales of fixed assets
Purchase of fixed assets
Acquisition of investments in affiliates
Other
Net cash used in investment activities

(51)
－
119
(619)
(30)
(34)
¥(616)

(3)
50
－
(645)
－
26
¥(572)

(522)
－
1,209
(6,297)(304)(346)$(6,261)

Net cash used in financing activities:
Increase in short-term loans payable
Purchase of treasury stock
Cash dividends paid
Proceeds from issuance of common stock
Net cash used in financing activities:

329
(38)
(56)
－
¥234

(170)
(31)
(33)
775
¥540

3,345
(386)
(576)
－
$2,382

57

13

587

Increase (Decrease) in cash and cash equivalents

(282)

(57)

(2,870)Cash at beginning of period

3,996

4,053

40,616

Cash at end of period¥3,714¥3,996$37,746

Effect of exchange rate change on cash and cash equivalents

See Notes to the Consolidated Financial Statements.

-6-Notes to the Consolidated Financial Statements
NIKKO COMPANY

1. Basis of Presenting Consolidated Financial Statements(1) Accounting Principles and Presentation

The accompanying consolidated financial statements have been prepared from the accounts maintained by
Nikko Company (the "Company") and its consolidated subsidiaries (the "Companies") in accordance with theprovisions set forth in the Japanese Commercial Code and other countries' regulations and in conformity withaccounting principles and practices generally accepted in Japan, which are different in certain respects as toapplication and disclosure requirements from International Accounting Standards.
Certain items presented in the consolidated financial statements filed with the Ministry of Finance (the"MOF") in Japan have been reclassified for the convenience of readers outside Japan.
The consolidated financial statements are not intended to present the consolidated financial position, resultsof operations and cash flows in accordance with accounting principles and practices generally accepted incountries and jurisdictions other than Japan.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of¥98.40=U.S.$1 the approximate rate of exchange at October 31, 2008, has been used in translation. The
inclusion of such amounts is not intended to imply that Japanese yen have been or could be readily converted,
realized or settled in U.S. dollars at the rate or any other rate.

(2) Scope of Consolidation

The Company had 3 subsidiaries as at October 31, 2008 (2 subsidiaries as at October 31, 2007). The
consolidated financial statements include the accounts of the Company and 3 (2 for 2007) of its subsidiaries.
The consolidated subsidiaries are listed below:
As at October 31, 2008
Equity ownership percentage,
Capital stockincluding indirect ownership(thousands)
Nikko Ceramics, Inc.

100.00 %$1,250

Nikko Hanbai Co., Ltd.

94.85 %

¥470,000

Nikko ME Co., Ltd.

100.00 %¥30,000(3) Consolidation and Elimination

For the purposes of preparing the consolidated financial statements, all significant intercompany
transactions, account balances and unrealized profits among the Companies have been eliminated, and the
portion thereof attributable to minority interests is charged to minority interests.
The cost of investments in the common stock of consolidated subsidiaries is eliminated with the underlying
equity in net assets of such subsidiaries. The material difference between the cost of an investment and theamount of underlying equity in net assets of such subsidiary is deferred and amortized over a reasonable
period within 5 years on a straight-line basis.

(4) Investments in Unconsolidated Subsidiaries and Affiliates

At October 31, 2008, the Company had 5 affiliates. They have not been accounted for by the equity method forthe following reasons: insignificant amount of net income and retained earnings. The investments in affiliates
are stated at cost.

－7－2. Summary of Significant Accounting Policies(1) Valuation of Securities

The accounting standard for financial instruments requires that securities be classified into three categories:
trading, held-to-maturity or other securities. Trading securities are carried at fair value and held-to-maturity
securities are carried at amortized cost. Marketable securities classified as other securities are carried at fairmarket value with any changes in unrealized gain or loss, net of the applicable income taxes, included directly
in shareholders’ equity. Non-marketable securities classified as other securities are carried at cost. The cost of
securities sold is determined by the moving average method.

(2) Inventories

Inventories held by the Company and the domestic consolidated subsidiary are stated at cost. Cost isdetermined by the periodic average method for finished goods and goods in process, by the moving averagemethod for raw materials and supplies, and by the specific identification method for construction in process.
Inventories held by the overseas consolidated subsidiary are valued at lower cost, which is determined by the
FIFO method.

(3) Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment except forbuildings of the Company is computed on the declining-balance method and depreciation of buildings iscomputed on the straight-line method, at rates based on the estimated useful lives of the assets. Depreciationof property, plant and equipment of the domestic consolidated subsidiary is computed on the declining-balancemethod and buildings (except for structures attached to the buildings) acquired on and after April 1, 1998
have been depreciated by the straight-line method. The estimated useful lives are based on the prescribed by
the Japanese income tax laws. The overseas consolidated subsidiary has computed by the straight-line
method. Normal repairs and maintenance, including minor renewals and improvements, are charged toincome as incurred.
(Additional information)
Pursuant to the amended corporation tax law of Japan, as for property, plant and equipment acquired
before April 1, 2007, the Company and the domestic consolidated subsidiary previously depreciated up to
the depreciable limit of 5% of the acquisition cost in accordance with the corporation tax law of Japan.
Effective from this period, the residual value is depreciated over five years using the straight-line methodfrom the fiscal year following the year in which the depreciable limit is reached pursuant to the amended
corporation tax law of Japan. As a result, operating income and income before income taxes decreased by¥55million ($563 thousand), respectively.

(4) Foreign Currency Translation

Foreign currency amounts except for those covered by forward exchange contracts are translated into
Japanese yen on the basis of the rates of exchange in effect at the balance sheet date for monetary current
assets and current liabilities, and at historical rates for other assets and liabilities unless they have accrued
significant exchange losses. Foreign currency amounts covered by forward exchange contracts are translated
into Japanese yen at the relevant contract rates. Historical rates are used for translation of income andexpenses.

(5) Recognition of Income Taxes

The Companies adopted deferred tax accounting, whereby tax effects on temporary differences are adequatelyreflected and recognized as additions to or deductions from "Income Taxes" in the accompanying Consolidated
Statements of Income.

(6) Translation of Foreign Currency Financial Statements(Accounts of Overseas Subsidiaries and Affiliates)
Financial statements of foreign subsidiary is translated into Japanese yen at the current exchange rates as of
the balance sheet date for all balance sheet accounts except for shareholders’ equity accounts, which istranslated at the historical exchange rate. The annual average rate is used for revenue and expense accounts.

(7) Amortization

The amortization of intangible assets of the Company and the domestic consolidated subsidiary are computedby the straight-line method, at rates based on the prescribed by the Japanese income tax laws.
Expenditures related to computer software intended for internal use are amortized over the useful life of therespective assets (5 years).
The overseas consolidated subsidiary has computed by the straight-line method.

－8－

(8) Allowance for Doubtful Accounts

Allowance for doubtful accounts is calculated based on the aggregate amount of estimated credit losses for
doubtful receivables plus an amount for receivables other than doubtful receivables calculated using historical
write-off experience from certain prior periods.

(9) Reserve for guarantee for after-care of products

As warranty expenses for certain products sold by the Company are subsequently realized, a provision for
product warranty has been recorded in order to reflect the results of their operations more accurately.

(10) Derivatives

Derivatives are valued at fair value if hedging accounting is not appropriate or where there is no hedging
designation, and the gains or losses on derivatives are recognized in the current earnings.

(11) Accounting for Leases

Finance leases other than those which are deemed to transfer the ownership of the leased assets to lessees areaccounted for by the method similar to that applicable to ordinary operating leases.

(12) Net Income and Dividends per Share"Net income per share" of common stock is based upon the weighted average number of shares of common
stock outstanding during each year. Cash dividends per share shown for each year in the Consolidated
Statements of Income represent dividends declared as applicable to the respective year, rather than those
paid in each year.

(13) Cash Equivalents

Cash Equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits and investment trusts that
represent short-term investments, all of which mature or become due within three months of the date ofacquisition.

(14) Shareholders’ Equity

The amount of retained earnings available for dividends under the Commercial Code of Japan is based on theamount stated in the statutory financial statements of the Company. Dividends are approved by theshareholders at a meeting held subsequent to the fiscal year to which the dividend is applicable. In addition, asemi-annual interim dividend payment may be made by resolution of the Board of Directors subject to certain
limitations imposed by the Commercial Code.

(15) Research and Development Costs

Expenses relating to research and development activities are charged to income as incurred. Such researchand development expenses were included in cost of goods sold and selling, general and administrative
expenses in the accompanying consolidated statements of income and amounted to ¥275million ($2,797
thousand) and ¥305million ($2,660 thousand) for the years ended October 31, 2008 and 2007, respectively.

－9－3. Short-term Bank Loans
Short-term bank loans of subsidiaries are secured by the Company, at an annual weighted average interest
rate of 1.97% at October 31, 2008.and 2.08% at October 31, 2007.
Millions of yen
2008
Short-term bank loans¥2,5342007¥2,205

Thousands of
U.S. dollars
2008$25,756

4. Pledged Assets
The carrying amounts of assets pledged as fixed collateral at October 31, 2008 and 2007, the Company had noliabilities.
Millions of yen
2008
Property, plant and equipment– net of accumulated depreciation

¥217

2007
¥209

Thousands of
U.S. dollars
2008$2,212

5. Contingent Liabilities
Contingent liabilities in respect of guarantees of indebtedness of employees amounted to ¥8million ($91
thousand) at October 31, 2008 and ¥8 million ($77 thousand) at October 31, 2007.

6. Retirement Plans and Severance Indemnities(1) The Company and its domestic consolidated subsidiaries have defined benefit plans, tax-qualified pension
plans, covering substantially all employees who are entitled to lump-sum or annuity payments, the amountsof which are determined by reference to their basic rates of pay, length of service, and the conditions underwhich termination occurs.
The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the
consolidated balance sheet as of October 31, 2008 and 2007 for the Company’s and the consolidated
subsidiaries’ defined benefit plans(2) Components of accrued pension and severance costs as of October 31, 2008 and 2007 are as follows:
Thousands ofMillions of yen
U.S. dollar
2008
2007
2008
Retirement benefit obligation at end of year
Plan assets
Unfunded retirement benefit obligation
Unrecognized net retirement benefit obligation
at transition
Unrecognized actuarial loss
Unrecognized prior service cost
Net amount recognized on the balance sheet
Prepaid pension expenses
Accrued retirement benefits
A consolidated subsidiary use the simplified method.

－10－¥(3,107)
1,280(1,827)¥(3,092)
1,712(1,380)$(31,585)
13,013(18,571)

478

547

4,865

313
―
(1035)―(1035)

(48)
―
(882)
―
(882)

3,185
―
(10,520)―(10,520)

(3) Components of retirement benefit expenses for the year ended October 31, 2008 and 2007 are as follows
Thousands ofMillions of yen
U.S. dollar
2008
2007
2008
Service cost
Interest cost
Expected return on plan assets
Amortization of transition obligation
Amortization of actual loss
Amortization of prior service cost
Retirement benefit expenses

¥206
59
(32)
68
11
16
329

¥190
58
(31)
68
20
8
315

$2,101
602
(333)
695
119
164
3,349

Retirement expenses under the simplified method are included in service cost.
(4) Assumptions used for calculation of retirement benefits for the year ended October 31, 2008 and 2007 are as
follows:
2008
2007
Method of attributing the project benefits to periods of service
Discount rate
Expected return on plan assets
Amortization period of unrecognized actuarial gains or losses
Amortization period of net transition obligation

Straight-line method
2.0 %
2.0 %
2.0 %
2.0 %
13 years
15 years

7. Deferred Tax
Deferred tax assets and liabilities (both current and non-current) consisted of the following elements:
Thousands
ofU.S. dollar
2008

Thousands of yen
2008
Deferred tax assets:
Allowance for bonuses not deductible until paid
Reserve for guarantee for after-care of products
Allowance for doubtful accounts
Loss on valuation of inventories
Loss on disposal of inventories
Impairment loss on fixed assets
Accrued directors' and statutory auditors' retirement benefits
Liabilities for retirement benefits
Loss on valuation of investments in memberships
Allowance for operating loss of subsidiaries
Unrealized profit on securities
Tax loss carried forward
Other
Subtotal
Allowance for valuation
Net deferred tax assets
Deferred tax liabilities:
Deferred gains on sales of property
Net deferred tax liabilities

－11－

2007

¥174
37
67
290
76
96
31
418
―
―
47
1,355
125
2,721
(2,716)
¥5

¥172
33
33
249
43
117
29
356
21
332
47
971
126
2,536
(1,678)¥858$1,769
385
689
2,956
780
978
316
4,250
―
―
478
13,7791,275
27,659(27,605)
$53

(6)
¥(6)

(7)
¥(7)

(68)
$(68)

The reconciliation of the statutory tax rate to the income tax rate reflected in the Consolidated
Statements of Income for the year ended October 31, 2008 and 2007 are not shown since the operating
result for the year was a loss before provision for income taxes.

8. Accounting for Leases
The following pro forma information of leased property such as acquisition cost, accumulated depreciation,
accumulated loss on impairment, obligations under finance leases, depreciation expense, interest expense offinance leases that do not transfer ownership of the leased property to the lessee on an “as if capitalized” basis
for the years ended October 31, 2008 and 2007, was as follows. (from 2008 The amounts of acquisition costs
and obligations under finance leases exclude the imputed interest expense portions.)
Millions of yen
2008
Acquisition cost
Machinery and equipment
Other assets
Accumulated depreciation
Machinery and equipment
Other assets
Accumulated loss on impairment
Machinery and equipment
Other assets
Net book value
Machinery and equipment
Other assets

2007

Thousands of
U.S. dollars
2008

¥848
112
¥960

¥467
121
¥588

$8,621
1,141$9,762

¥272
54
¥327

¥302
54
¥357

$2,773552$3,326

¥102
―
¥102

¥104
―
¥104

$1,040―$1,040

¥472
57
¥530

¥60
62
¥122

$4,806588$5,395

Obligations under finance leases as of October 31,2008 and 2007, are as follows:
Millions of yen
2008
Due within one year
Due after one year

¥94
441
¥536

2007
¥44
81
¥125

Thousands of
U.S. dollars
2008
$955
4,491
$5,447The imputed interest expenses portion which is computed using the interest method is excluded from theabove obligations under finance leases.
Depreciation expenses and interest expenses under finance leases as of 2008 and 2007, were as follows:－12－Thousands of
U.S. dollars
2008

Millions of yen
2008
Lease expenses for the year
Depreciation expense
Interest expenses
Loss on impairment

2007
¥52
47
6
57

¥59
59
―
47

$534
486
64
580

Depreciation expenses and interest expense, which are not reflected in the accompanying consolidated
statement of income, computed by the straight-line method and the interest method.

9. Investments
In accordance with the accounting standard for financial instruments, investment securities include equity
securities, bonds and other, of which the aggregate cost, gross unrealized gains/losses and fair value pertaining
to available-for-sale securities and held-to-maturities at October 31, 2008 and 2007 were as follows.
Available-for-sale securities
Securities with book values exceeding
Millions of yen
2008
Acquisition
cost¥1

Other securities
Millions of yen
2008

Book value

Difference¥1¥0Acquisition
cost
¥565

Thousands of U.S. dollars
2008

Difference¥448¥(116)

Thousands of U.S. dollars
2008

Acquisition
Book value
Difference
cost
$12
$16
$3
Available-for-sale securities
Securities with book values exceeding
Millions of yen
2007
Acquisition
cost
¥351

Book value

Book value

Difference

¥389

¥38

Acquisition
cost$5,748Book value

Difference$4,562$(1,185)

Other securities
Millions of yen
2007
Acquisition
cost
¥501

Book value

Difference¥347¥(153)

Available-for-sale securities whose fair value is not readily available as of October 31, 2008 and 2007 comprisefollowing:Thousands of
U.S. dollars
2008

Millions of yen
2008
Unlisted stocks
Others
Total

¥268
50
318

－13－

2007
¥48
―
48

$2,728508
3,236

10. Segment Information(1) Industry Segment Information
The Companies operate principally in the following three industrial segments:
Housing & Environmental Equipment
Tabletop
Electro-Ceramics

FRP bath-tubs, Bathroom units, Septic tanks, Water treatment
facilities, Tiles, Wind turbine system
Fine bone china, Fine vitrified china, Fine porcelain, Oven ware
Alumina substrates, Hybrid IC, LTCC substrates,
Dielectric ceramics

The segment information of the Companies ended October 31, 2008 and 2007 are presented below:
Millions of yen
2008
Housing &Environmental
Equipment
Sales:
Sales to customers
Intersegment sales
Total sales
Operating expenses
Operatingincome(loss)
Total assets:
Depreciation:
Capital expenditure:

Tabletop

ElectroCeramics

Other

Eliminations/
Consolidated
Corporate

Total¥11,174―
11,174
11,109¥6,436
―
6,436
6,420

¥3,633
―
3,633
3,979

¥24
―
24
49

¥21,267―
21,267
21,558―――755¥21,267―
21,26722,314

64

15

(346)

(25)

(290)

(755)

(1,046)¥4,400166
161¥5,323131
111¥2,780
133
270

¥9
1
11

¥12,514432
555¥5,53219522¥18,046451
1,078

Thousands of U.S. dollars
2008
Housing &Environmental
Equipment
Sales:
Sales to customers
Intersegment sales
Total sales
Operating expenses
Operatingincome(loss)
Total assets:
Depreciation:
Capital expenditure:

Tabletop

ElectroCeramics

Other

Eliminations/
Consolidated
Corporate

Total$113,557―
113,557
112,898$65,412―65,412
65,254$36,922―36,92240,439

$245
―
245
502

$216,137―
216,137
219,094

―
―
―
7,675

$216,137

659

158(3,517)(256)(2,956)(7,675)(10,632)$44,718$54,099$28,259
1,355
2,748

$99
13
119

$127,177$56,221$183,398

1,694
1,644

1,334
1,135

4,397
5,648

194
5,311

―
216,137
226,769

4,591
10,959Millions of yen
2007
Housing &Environmental
Equipment
Sales:
Sales to customers
Intersegment sales
Total sales
Operating expenses
Operatingincome(loss)
Total assets:
Depreciation:
Capital expenditure:

Tabletop

ElectroCeramics

Other

Eliminations/
Consolidated
Corporate

Total¥11,655―
11,655
11,373¥6,653
―
6,653
6,362

¥4,035
―
4,035
4,213

¥14
―
14
33

¥22,359―
22,35921,982―――647¥22,359―
22,35922,630

282

290

(177)

(19)

376

(647)

(270)

¥4,555125
94¥5,058105
160¥3,514
81
229

¥10
0
0

¥13,138312
485¥6,68713315¥19,826
326
800

－14－

(Change in accounting policies)
Pursuant to the amended corporation tax law of Japan, effective from this period, the residual value of
property, plant and equipment acquired before April 1, 2007, is depreciated over five years using thestraight-line method from the fiscal year following the year in which the depreciable limit (5% of theacquisition cost) is reached pursuant to the amended corporation tax law of Japan. As a result, theoperating income of the Housing & Environmental Equipment, Tabletop, Electro-Ceramics and Other
decreased by ¥15million ($154 thousand), ¥15million ($160 thousand), ¥22million ($226 thousand),¥0million ($3 thousand), respectively.
(2) Information by Geographic Segment
As more than 90% of the consolidated net sales for the two years in the period ended October 31, 2008 and 2007
were made in Japan, the disclosure of geographic segment information has been omitted.

(3) Export Sales and Sales by Overseas Subsidiaries
Export sales of the Companies (meaning the amounts of export made by the Company and its domestic
subsidiaries plus the sales of overseas consolidated subsidiaries) ended October 31, 2008 and 2007 arepresented below:

Millions of yen
2008
Export sales and sales by overseas subsidiaries:
Overseas sales
Net sales
Percentage of such sales against consolidated net sales

Americas¥1,321Asia¥1,096

Other
¥156

6.2%

5.2%

0.7%

Total
¥2,574
21,267
12.1%

Thousands of U.S. dollars
2008
Export sales and sales by overseas subsidiaries:
Overseas sales
Net sales

Americas$13,432

Asia$11,141

Other$1,589Total$26,162
216,137

Millions of yen
2007
Export sales and sales by overseas subsidiaries:
Overseas sales
Net sales
Percentage of such sales against consolidated net sales－15－

Americas¥1,654

Asia¥1,046

Other
¥149

7.4%

4.7%

0.7%

Total
¥2,851
22,35912.8%

11. Derivative Financial Instruments
The Company has entered into forward exchange contracts and currency swaps with banks as hedges against
receivables denominated in foreign currencies and into commodity swap with banks as hedges against purchaseprice of fuel. These derivative financial transactions are utilized solely for hedging purposes under the internal
control rules and the supervision by the Board of Directors.
The following tables summarize market value information as of October 31, 2008 and 2007, of derivatives forwhich hedge accounting has not been applied.

Currency Related

Millions of yen
2008

Foreign Exchange Forward Contracts:
Selling U.S. dollar
Contract amountDue after one year
Fair value
Unrealized Gain/(loss)
Currency Swaps:
U.S. dollar payment/Yen receipt
Contract amountDue after one year
Fair value
Unrealized Gain/(loss)

Commodity Related

2007

¥21
―
19
1

¥105
―
102
3

$217
―
199
18

―
―
―
―

¥901
―
(4)
(4)

―
―
―
―

Millions of yen
2008

Oil Swap Contracts:
Receive floating/ Pay Fixed
Contract amountDue after one year
Fair value
Unrealized Gain/(loss)

Thousands of
U.S. dollars
2008

2007

¥53
10
35
35

¥151
53
241
241

Thousands of
U.S. dollars
2008

$543
109
361
361

12. Amounts Per Share Common Stock
Net income per share is computed by dividing income available to common shareholders by the weightedaverage number of shares of common stock outstanding during the respective years.

－16－Board of Directors and Statutory Auditors
NIKKO COMPANY(As of January 29th, 2009)

Chairman
Akitoshi Sakai
Chief Executive Officer
Makoto Yoshida
Board Director, Executive Managing Officer
Kazuto Futamata(Housing & Environmental Equipment Division, General Manager)
Shigekazu Kaneda(Finance & Administration, General Manager)
Board Director, Managing Officer
Kenji Kita
Yoshiaki Iwasaki
Nobuyasu Oda
Kazuo Miyanabe
Makoto Aoki

(Tabletop Division, General Manager)(Tabletop Division, Head-Factory Manager)(Housing & Environmental Equipment Division, Product Planning Division,
Manufacturing Division, Administraion Division Manager)(Production Engineering Dept, General Manager
Electro-Ceramics Division, Manufacturing Director)(Electro-Ceramics Division, General Manager)

Board Director
Mitsuru Mitani
Executive Auditing Director
Norio Yamamoto
Auditors
Shigeru Sawa
Takao Anzai

Corporate Data
Head Office
383 Ainoki-Machi, Hakusan-City,
Ishikawa-Prefecture 924-8686 Japan
Tel : 076-276-2121
Facsimile : 076-276-3309

Japanese Stock Exchange
Nagoya Stock Exchange
Transfer Agent and Registrar
The Sumitomo Trust & Banking Co., Ltd.
5-33 Kitahama 4-chome, Chuo-ku, Osaka 541-0041
Japan

Date of Establishment
May 11th, 1908

Annual General Meeting
The annual general meeting of shareholders
is held in January each year in Ishikawa-PrefectureShow RoomTokyo, Osaka, Toyama, New York
Factories
Head Factory, Tsurugi Factory, Saitama Factory

Auditors
AZSA & CO.

Subsidiaries and Affiliates
NIKKO CERAMICS, INC. (U.S.A.)
Nikko Hanbai Co., Ltd. (Japan)
Nikko ME Co., Ltd. (Japan)
N&I ASIA PTE LTD. (Singapore)
NIKKO (Asia) Co., Ltd. (Thailand)
Nikko Care Co., Ltd. (Japan)

URL
http://www.nikko-company.co.jp/- 17 -